Important Statement
Internal control is a process implemented by the board of directors, audit committee, management, and all employees aimed at achieving control objectives. Under the supervision of the corporate governance structure, the board is responsible for designing, implementing, and maintaining effective internal controls, evaluating their effectiveness, and truthfully disclosing the internal control assessment report. The audit committee supervises the establishment and implementation of internal controls by the board. The management is responsible for organizing and leading the daily operations of internal controls. The board, audit committee, and senior management ensure that this report contains no false records, misleading statements, or significant omissions, and they bear individual and joint responsibility for the truthfulness, accuracy, and completeness of the report's content. The goal of establishing and implementing internal controls is to reasonably ensure that the company's operations are legal and compliant, assets are secure, financial reports and related information are true and complete, operational efficiency and effectiveness are improved, and the company achieves its development strategy. Due to inherent limitations in internal controls, they can only provide reasonable assurance of achieving these objectives. Additionally, changes in circumstances may render internal controls inappropriate or reduce adherence to control policies or procedures, making it risky to infer future effectiveness based on internal control assessment results.
Organization of Internal Control Assessment
The internal control assessment work is led by the board of directors and its audit committee, forming an evaluation team primarily led by the audit department with participation from multiple departments to assess the main risk areas and units included in the evaluation.
Evaluation Procedures:
- Establish an evaluation team and develop an evaluation plan;
- Conduct on-site inspections;
- The evaluation team studies and identifies internal control deficiencies;
- Discuss and review rectification plans;
- Submit for board approval according to prescribed authority and procedures.
Evaluation Methods:
The evaluation team employs various methods, including individual interviews, surveys, thematic discussions, walkthrough tests, statistical sampling, and comparative analysis, to widely collect evidence of the design and effective operation of internal controls, identifying design and operational deficiencies.
Scope of Internal Control Assessment
The company determines the main units, businesses, and high-risk areas included in the evaluation based on a risk-oriented principle. The main units included in the evaluation are Yiwang Yichuang Technology Co., Ltd. and its subsidiaries, including Hangzhou Wankuo E-commerce Co., Ltd., Hangzhou Wensheng E-commerce Co., Ltd., Hong Kong Wangchuang E-commerce Co., Ltd., Guangzhou Wangchuang E-commerce Co., Ltd., and others. The total assets of the units included in the consolidation account for 100% of the total assets in the company's consolidated financial statements, and the total revenue accounts for 100% of the total revenue in the company's consolidated financial statements. The main businesses included in the evaluation are brand online marketing services, brand online management services, online distribution, and content e-commerce services. The matters included in the evaluation encompass corporate governance, organizational structure, development strategy, corporate culture, information disclosure, information systems, internal audits at the company level; and human resources, financial reporting, sales, procurement, fund management, asset management, guarantee business, research and development, related party transactions, and control over subsidiaries at the business level. The high-risk areas of focus include major business decisions, external investments, information disclosure, and sales collections. The units, businesses, matters, and high-risk areas included in the evaluation cover the main aspects of the company's operations and management, with no significant omissions.